The Answer Is Transaction Costs cover image

Roads, Public Goods, and Focal Points

The Answer Is Transaction Costs

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The Problem With Deciding Whether NPR Is a Public Good

The problem with deciding whether NPR is a public good is, well, transaction costs. If something is the characteristics of a public good but it's nonrival and consumption and non-excludable in production, then we still have to decide do we want that thing? For many people, roads are stink bombs. How much stink bomb do you want? Well none, even though it's a public good. We talked about the problem of being a free rider, but being a forced rider is also a problem. You're being obliged at gunpoint to give up resources to support things that are not public goods but are public bads like a stink bomb.

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